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Today’s Top Headlines




South Africa Issues Tax-Free Savings Amendments

by Lorys Charalambous, Tax-News.com, Cyprus

03 March 2017

The South African National Treasury has published final amendments to the overall regulations covering tax-free savings accounts (TFSAs) for the year beginning March 1, 2017.

TFSAs were introduced in South Africa on March 1, 2015, as an incentive to encourage households to save. They have a maximum annual contribution limit of ZAR30,000 (USD2,280) and a lifetime limit of ZAR500,000 per person. TFSA proceeds are exempt from income tax, dividends tax, and capital gains tax.

The amendments clarify the policy position on performance fees in underlying funds; give guidance on the adequate and consistent disclosure of returns to fixed deposit savings accounts; include various provisions to enable the regulator to adequately oversee product offerings; and align the rules of access for fixed deposits.

The National Treasury has confirmed that it still intends to allow investors to be able to transfer existing savings from one product provider to another during the life of a TFSA. However, under the new regulations, the ability of investors to transfer TFSAs will be further postponed until March 1, 2018, to allow product providers sufficient time to prepare for more onerous responsibilities in assisting investors to comply with the annual and lifetime limits.

While investors are required to manage their own limits across their different TFSAs, product providers will now, for example, be required to monitor the level of contributions already made by the investor to a previous product provider when transfers are introduced, and restrict the investor from making further contributions if they were to exceed the annual or lifetime limits.

TAGS: South Africa | compliance | tax | investment | tax compliance | law | financial services | capital markets | ministry of finance | tax breaks | regulation | services | Africa

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